Wedding Insurance: a Savvy Purchase?

WedSafe Policy

Roger and Karen Sandau established Wedsafe in 2000. According to Ms. Sandau, the president and cofounder of this organization, the idea grew out of the destination wedding they were planning in Maui, Hawaii and their need for protection for this large investment. This company has experienced tremendous growth during the last 3 years.

The WedSafe Wedding Insurance Policy is geared specifically to weddings. It is brokered by Robertson Taylor North America and underwritten by Markel North America. This prepackaged policy is available in four different levels, with the only difference being distinct policy limits. The levels range from $7,500 in limits (silver policy) to $50,000 in limits (diamond policy). The premium for these policies ranges from $155 for the silver policy to $385 for the diamond policy. Higher limits are also available via a telephone or in-person consultation. Their largest policy was recently written with a $700,000 limit.

The policy provides wedding cancellation and postponement coverage, which pays for deposits forfeited and other charges paid for transport, catering services, wedding accommodations, photographs, flowers, entertainment expenses, wedding attire, and related items, subject to the following five exclusions.

• Any circumstance known to the bride or groom at the policy inception date that causes the cancellation or postponement of the wedding
• Lack of funds, other than due to unemployment, after the inception date
• Failure to notify the contracted provider and avoid the loss after it was necessary to cancel or postpone the event
• Named insured knowingly breaks a law, which renders it impossible to hold the event
• Weather conditions, unless the conditions are so extreme that they prevent the bride, groom, close family members, or the majority of the guests from attending the event

Examples of some actual excluded events include the following.

• The bride or groom changes their mind about the nuptials.
• The bride or groom violate parole and are required to go back to jail or prison, disrupting the wedding.
• The bride or groom's divorce from a prior marriage is not finalized before the wedding.
• A medical condition of the bride or groom existed at the policy inception, but was unreported to the agent or insurer.

The WedSafe policy also provides additional services coverage. This includes those services not originally anticipated which are incurred to avoid an otherwise necessary cancellation or postponement, for up to 125 percent of costs of services originally contracted. An example would be the hiring of a photographer at the last minute for an additional cost, because the original photographer went out of business.

The cancellation coverage and additional services coverage are also subject to two extra exclusions. First, there is no coverage due to the voluntary decision of the insured party not to proceed with the ceremony for a reason unrelated to a covered peril (e.g., change of heart). Second, there is no coverage for a loss arising from (a) self-inflicted injuries, alcoholism, insanity, or influence of drugs; (b) any preexisting condition known to the bride or groom at the policy issuance date; (c) pregnancy commencing before the policy issuance date, unless the expected delivery date is more than 2 months after the wedding date; or (d) any planned event that is against the advice of a medical practitioner.

In addition, this prepackaged policy includes the following areas of coverage, with a range of limits depending on the policy selected.

• Wedding photographs and video ($1,000 to $3,000 limit)—pays expenses incurred to retake the photographs or video due to the nonappearance for any reason of the photographer, loss or damage to the original film before copies are received by the insured, and the nondevelopment of the original film
• Wedding attire ($1,000 to $3,000 limit)—pays the cost of replacing or repairing the lost, stolen, or damaged attire, or any requisite rental charges
• Wedding presents ($1,000 to $3,000 limit)—pays for any lost or damaged presents up to 7 days before or 7 days after the wedding
• Wedding rings ($1,000 to $3,000 limit)—covered for any cause within the 7 days preceding the wedding
• Loss of deposits due to the cessation of the provider's business ($1,000 to $3,000 limit)—covers any nonrefunded deposits paid for transport, catering services, accommodations, photographs, flowers, entertainment expenses, or wedding attire
• Professional counseling ($500 limit)—pays if the bride or groom suffer emotional stress requiring professional counseling as recommended by their medical physician, following cancellation of the wedding

Each of these coverages is subject to specified exclusions. In addition, there is a $25 deductible for each covered section.

Since this coverage is only offered on a prepackaged basis, insureds who do not need particular coverages cannot delete any undesired insurance for a premium credit.

The WedSafe policy also includes three general exclusions applicable to all coverages—radioactive contamination, war including civil war, and terrorist actions. Note, however, the terrorist exclusion does not apply if the act results in direct physical loss or damage to the ceremony or reception site, or if the act causes the cancellation of the insured party's transportation.

In addition, WedSafe offers a separate liability and property damage insurance policy, underwritten by Entertainment Brokers International. This is commonly purchased because many wedding or reception venues require couples to provide liability insurance, sometimes with limits up to $1 million. This policy protects the wedding couple from liability related to certain types of accidents occurring at the wedding or reception that result in bodily injury or property damage. Possible accidents include injury to guests or staff, facility damage, property damage, or alcohol-related accidents (host liquor liability only). This policy also allows the named insured to list up to three additional insureds beyond the bride and groom at no extra premium. The standard policy costs $150 and includes liability limits of $1 million per occurrence, with a $2 million aggregate. It also includes a $250,000 third-party property damage limit (e.g., guest carelessly discards a cigarette leading to a fire at the wedding reception hall).

Note, however, that if the wedding couple already has a homeowners policy, this coverage may be extraneous. For example, if a guest is injured at the wedding hall, most homeowners policies provide coverage. The wedding hall is an "insured location" under the ISO Homeowners 3 (HO 3) policy, since an "insured location" includes "any part of a premises occasionally rented to an 'insured' for other than 'business' use." In addition, "property damage" to property rented to an insured is covered under the HO 3 if the loss is caused by fire, smoke, or explosion. However, if guests become inebriated and inadvertently damage the reception hall carpet, coverage is excluded under the HO 3. The WedSafe policy would likely cover this loss, subject to a $1,000 deductible.

Weddingsurance Policy

Robert V. Nuccio, the President of R.V. Nuccio & Associates, developed Weddingsurance, the first of its kind, in the early 1990s and upgraded it into a new component-based product in 1997. Nuccio & Associates is the program administrator in all 50 states for this product, which is underwritten by Firemen's Fund. Unlike the Wedsafe policy, this flexible product is also used for bar and bat mitzvahs, reunions, graduations, anniversaries, and other private events. Weddingsurance is popular in areas of the country prone to weather catastrophes, such as tornadoes, hurricanes, earthquakes, and floods. Every agent and broker in the United States can sell this product on a commission basis.

Common covered claims under this policy include the postponement or cancellation of a wedding due to a sudden illness (e.g., appendicitis or heart attack), an automobile accident, or the sudden disease of the bride, groom, or significant family member. According to Mr. Nuccio, the closing of the airports after the September 11, 2001 tragedy also resulted in numerous covered losses.

The policy offers nine specific coverages, including the following.

• Cancellation or postponement
• Additional expense
• Photographs and video
• Gifts
• Rented property
• Special attire
• Jewelry
• Personal liability
• Medical payments

There are numerous similarities between the Weddingsurance policy and the WedSafe policy. For example, the Weddingsurance policy includes what Mr. Nuccio calls the "cold feet" exclusion, also known as the "change of heart" exclusion. He believes this is the key exclusion in the policy, since many engagements are called off prior to the wedding.

Weddingsurance's weather coverage is available only if the policy is purchased 14 or more days from the date of the event. However, the product can still be procured (without weather coverage) 1 day before the wedding.

The Weddingsurance policy has a base premium of $195 for a $3,000 limit, including a $250 deductible applying separately to each coverage. Unlike the WedSafe policy, Weddingsurance's coverage and limits can be tailored to the insured's specific needs. If the bride and groom already have homeowners coverage, this offers a particular advantage. For example, wedding presents coverage may not be needed because the homeowners policy grants worldwide coverage for this type of property, up to the full personal property limit. (Note, however, that the covered perils are more restrictive under the homeowners policy, as compared to the Weddingsurance policy.)

This tailoring of coverage is easily handled through a self-rating worksheet found on the organization's website. This transaction can also be performed via the telephone.

In addition, the Weddingsurance product provides liability coverage within its policy, unlike the Wedsafe program, which requires a separate policy for this loss exposure. Weddingsurance's standard liability limit is $500,000, which can be increased for an extra premium. In addition, Weddingsurance includes third-party property damage at the full limit.

Who Should Purchase this Insurance?

This insurance may not be for every prospective bride and groom. If a small or inexpensive wedding is planned, the cost of the insurance may outweigh the benefits. An example might be a smaller wedding in which the bride and groom have extensive financial resources, but with an extravagant honeymoon planned for which they have purchased travel insurance.

If the bride and groom are flexible on the wedding particulars (e.g., the number of wedding photographs or reception hall location), then this coverage may not be necessary. However, Mr. Nuccio respectfully disagrees with this philosophy. He believes that "only those that can afford to provide the same wedding twice should pass on the policy." He contends that few people fit into this category. According to Ms. Sandau, wedding insurance is a good financial decision for nearly all weddings, because the cost of weddings are relative, since a $10,000 wedding to one person may be more "expensive" than a $50,000 wedding to another.

For large and expensive weddings in which the bride and/or groom want everything perfect (which is nearly always the case), this insurance may be a wise investment. It is recommended that the insured get quotes and sample policies from more than one organization to compare premiums and coverages for the right fit. Ideally, this should be purchased far in advance of the wedding, before any expenses are incurred.